Kevin Frye: Selling Cars With Crypto Currency
Kevin Frye is the Head Marketing Coach at Jeff Wyler Automotive Family, an industry veteran, and subject matter expert when it comes to innovating within the retail automobile industry. In this episode of the show, Kevin walks through the process that led one of their stores to the first cryptocurrency transaction. Today, all stores in the organization accept crypto as a form of payment for a vehicle.
What we discuss in this episode:
1:11 - Can any dealership start accepting crypto as a form of payment or is there a longer-term process that leads up to it?
1:47 - Kevin explains that there are two key elements to innovating within the car industry, and one of the aspects has to do with never being satisfied. Always looking to push the envelope and try something new. The second aspect has to do with taking the word "no" out of innovation — a common approach was taken by many dealerships. Most won't be bothered by the aggregation caused by trying to do something new, so they just resort to saying "no" to it. Kevin explains that his team takes the opposite approach. They welcome the friction if they can see it map to innovation.
3:21 - Kevin explains how they received the inspiration to investigate transacting with crypto, as well as address some of the common fears that might be associated with accepting crypto from a dealer's perspective.
7:28 - Kevin shares an analogy about how the crypto exchange works and how they view it as a dealer group.
10:31 - By accepting crypto, the dealership can streamline the time of the transaction by removing barriers to the money transfer. The customer can utilize their assets to pay for the vehicle however they choose.
Listen to the full episode for even more insights about utilizing crypto to transact car purchases.
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Thanks, Kevin Frye
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FULL TRANSCRIPT
[00:00:00] Michael: All right, gang. Unless you've been living under a rock, you should know by now that the world's evolving things are changing. New currencies, web three, the metaphor. NFTs. There are so many new and emerging technologies and things that are happening that are shaping the way that consumers move to a purchase.
[00:00:22] And I mean, it's so important for us to pay attention to those things and no better individual to join us. Then the, what do we say now? The head coach of marketing at Jeff Wyler automotive family. Yes. So excited to have you Kevin Frye. Welcome back to the dealer playbook.
[00:00:39] Kevin Frye: It is great to join you as well.
[00:00:41] Michael, I'm excited to talk a little bit about our, uh, work and use of with cryptocurrency as of late. And of course, any other hot topics you might throw at?
[00:00:51] Michael: Yeah, I'm excited. Are you going to be talking about this at digital dealer?
[00:00:56] Kevin Frye: You know, it's funny you asked that because I wasn't originally. Uh, but I am going to include our first cryptocurrency transaction within that, just because I've had so many phone calls, emails, detached with people, with questions about how we're doing.
[00:01:11] Michael: Is it something that you could just get into? I mean, when I look at the work you've done over the years, I've heard you speak maybe a dozen times. It's always so. Um, it resonates so deeply. It's tactical, where it needs to be tactical. It's foundational, where it needs to be. But it's clear as I listened to you speak over the years, you're not someone that just goes, oh, we need to do that, but we don't have this yet, but let's just not want us to sweep that under the rug.
[00:01:41] No, you're focused on operation and making sure that you're set up to succeed. Is that a fair assessment?
[00:01:47] Kevin Frye: It is, and you know, the secret innovation, there's really a couple aspects of it. Number one, you're never satisfied with what you currently have. So you will always question everything you're doing.
[00:01:58] Can we do it better? And then the other aspect, and I'm literally looking at a sign outside my window in the marketing space is that we take the word no out of the word. Because it's so easy to have an idea it's way out there. I just say, no, I don't think we can do there's too much aggravation. We take the opposite approach.
[00:02:19] And that enables us to lead with innovations, for example, with cryptocurrency.
[00:02:24] Michael: Wow. So let's talk about this. I mean, of course that's, that's likely why everyone's listening. They don't want to talk. They don't want to hear us talk about the years and years of work you've put in. And how that's prepared you for a crypto transaction.
[00:02:39] You were saying earlier that it's, that it's probably easier than a lot of people think. I want to just reference, let me just pull up here on your LinkedIn, by the way DPB gang. If you're not following Kevin on LinkedIn, you definitely need to do that. And we'll link to his profile on the show notes. Um, you said something here about how.
[00:03:01] Yeah, here we go. This is about a week ago. You say we have already accepted cryptocurrency for several car transactions, always looking to lead and be more consumer facing. So here I am being like, oh, you're good job. They did a crypto transaction and you're saying, no, we've actually done a few of them.
[00:03:19] What does it look like? How do you even set something like
[00:03:21] Kevin Frye: that up? Well, let me start with the, the birth of the idea. And it actually came from my dealer principles, kids. And they said something to him about Wydell. We accept cryptocurrency of the Jeff Wyler automotive family, and he passed that on to me.
[00:03:38] So what I'd like to do is start out with Michael is some of the fears and concerns that I know dealers have everywhere to include being on this podcast today. Uh, number one, the volatility in a risk factor. So, if you play with cryptocurrency, you can see tremendous ups and downs and the value on a daily basis.
[00:04:02] So as a dealer, one of the big concerns is that, Hey, if I accept cryptocurrency, let's say for argument's sake, it's a twenty-five thousand dollars that I accepted. And three days later when I go to finalize the deal, now it's only worth 20 grand that I just lose, lose $5,000. Or take a train and go the opposite way.
[00:04:25] And then on the other respect, just the way we work. If I have a floating number because of volatility before I finalize that deal, how do I pay a sales commission? A sales commission is on a firm selling price, a firm costs, et cetera. So we started doing our due diligence last year in August to address these issues.
[00:04:48] And when I lay out how we're doing it, I think we're not only going to Aleve the concerns that dealers have. You're going to be surprised at how simple we're doing.
[00:04:59] Michael: It's funny you bring all of that up because you're right. My first thought was what are the tax implications?
[00:05:06] Kevin Frye: Yes, that's a common question.
[00:05:09] And I got to hear you. Please take me, right? Everybody in podcast land. I always, whenever you innovate, you get about half of the dealer. Audience is like, Hey, great job. And the other half is like calling you a clown, a fool, every name in the book, how can you do something? And I'm just used to it at this point, but it also makes it kind of fun to walk you through how we approach.
[00:05:32] And solve the problem. I can talk about some of the taxation issues, but I'm going to tell you now, a lot of this is still gray area with cryptocurrency in accounting and how it's being taxed. Not only in the United States with throughout the world.
[00:05:50] Michael: Okay. This is the, I love everything about this. I mean, I don't know if it's cause I'm the biggest geek there is or whatever, but I love this and you're right.
[00:06:00] I mean, Human nature, I think is that we tend to fear what we can't understand. And so then of course, I mean, look at, look at, uh, Elon Musk's haters right now that why would this guy buy 9% of a company that's not really then? And then all of a sudden you're like, oh, he's working a bigger plan. He's he's, he's working a bigger plan.
[00:06:23] Um, and so I get that side of things, but I'm really interested now, speaking directly to those who are curious about. Well, what did the process look like? You said, you said August is when you started thinking about this of last year
[00:06:38] Kevin Frye: August. We started doing the due diligence to work, how we could do this and accepted.
[00:06:43] And we actually got everything in place of February of this year, but we hadn't started marking it until late March and then had our first transaction in April. And then we've been approached several times since the press release. Because the word is now getting out. There's some excitement about the press release actually exploded worldwide, especially with the cryptocurrency sites.
[00:07:09] And specifically our first transaction was with a theory, which is one of the cryptocurrencies that audience really took off with it, uh, as well. Uh, but if you'd like, I can walk you through the mechanics of how it's set up and how we're doing it. I think that's going to answer 90% of the questions.
[00:07:28] Let's
[00:07:28] Michael: do it.
[00:07:28] Kevin Frye: I'm ready. So let me draw the first analogy. Cause I like to use some simple analogies. Let's say I fly to France. And when I get off the plane, I need to get some French currency. So typically a year poor, you're going to see a currency exchange service, which is essentially business for a fee.
[00:07:48] We'll take my us dollars and exchange those into French Franks at that point, that is the. Of situation that we have set up, we're working with a third party exchange service that actually handles the transaction so that we never formally take possession of the crypto currency. All right. So that's going to surprise a lot of people, but let me walk you through how that works and that's going to make a lot of sense.
[00:08:20] A consumer walks into our dealer. And they indicate that I would like to buy the car using cryptocurrency or pay part of the transaction amount with cryptocurrency. We will ask them, what is the amount of cryptocurrency you want to apply? And let's say for argument's sake, it's $15,000. What we will do is with this exchange service, we're going to generate an invoice for that $15,000.
[00:08:50] We will email that to our customer when they get that they can select up to 12 different cryptocurrencies and they can either a do 15,000 all from one cryptocurrency. Maybe they want to do a mix, uh, say 10,000, a Bitcoin and 5,000 of a theory. And then on that online, There is a 1% processing fee. So think similar to a credit card transaction.
[00:09:20] In our case, we put that processing fee builds into the invoice. So that is bared by the customer. That cost once that is complete, we get the money and U S dollars transferred directly via ACH to our bank account within 24 to 48 hours. So we have no risk. We are going to get, and us dollars, the exact amount that we transact.
[00:09:50] Now, mind you, the person in the middle of the exchange service. If that cryptocurrency goes up in value, they bear the benefit. If it goes down in value, they take the loss. But of course they have the processing fee to offset. So Michael, what I would suggest to you and another analogy is it's just another form of payment.
[00:10:13] It's like using a credit card. I might have an American express. I might have a visa, I have cryptocurrency, but at the end of the day, I'm getting us dollars.
[00:10:23] Michael: Yeah, it makes total sense. And also with a 1% processing fee, it's a heck of a lot cheaper than processing an Amex.
[00:10:31] Kevin Frye: Well, you know, the, I gotta tell you in our first transaction and this, when you innovate, you start finding these stories along the way.
[00:10:38] We had a gentleman that was interested and an S five 80 at our Mercedes-Benz point, we came to terms on the deal. At which point he informs us he's in Saudi Arabia and wants to do an international wire transfer. That means at least a one week. Right. And right now with inventory situations and dealers, nobody wants to put a hold on a car for a week.
[00:11:07] However, by using crypto currency, we're essentially snap getting approved just like that, getting that money in there. So it becomes incredibly simple for him as the customer. It's also consumer facing because he can utilize his assets, his cryptocurrency to pay for the vehicle when it's a win-win for both sides.
[00:11:29] Michael: Ah, man. And you know, what I love about this is it bypasses because it's decentralized and, and whatnot, you essentially become your own bank. I mean, or at least could have the potential to be. This didn't have to pass through. I mean, other than the company that's helping you facilitate it in a lot of day-to-day scenarios.
[00:11:53] There's no intermediary, this is going from them, their wallet to my wallet.
[00:12:00] Kevin Frye: Well, we do have an intermediary with the exchange service for using, but I'm going to put this out to you, Michael, because there's some good feedback I'm getting. And so this is the approach we're taking, which is fairly conservative.
[00:12:13] There are people out there, businesses. And you're going to see this, uh, prevalent in Europe for the past year where the, the business directly wants to take the cryptocurrency in exchange for the product or service they're selling, because they're going to put it on their balance sheet. Now I'm going to tell you what, by golly, when you're going to get to the accounting, occluding that on your balance sheet, it's going to get.
[00:12:38] With our looking at it as an investment opportunity and ability to mine essentially collect crypto currency into their portfolio. Right. Am I recommending that to dealers out there? I can't see a public doing it. Maybe some smaller privates might want to do it, but for us, we're just going to have. With an exchange service in the middle.
[00:12:59] So we're dealing with us dollars.
[00:13:01] Michael: Yeah. And that makes perfect sense. And like you said, it mitigates a lot of the risk there's, you know, I'm, I'm, I'm just facilitating a new, faster way to exchange currency and then getting it out in the currency that I need to go buy bread, you know? So that, that makes perfect sense.
[00:13:17] Now why in the world, does somebody in Saudi Arabia reach out? Like, was this just a, such a rare. Mercedes that they were like, I can't get it here. Or what, what does that, or
[00:13:28] Kevin Frye: are they from, I like this question because it's funny, it's a lot more of our luxury buyers that expressed insurance interest in leveraging their cryptocurrency.
[00:13:37] They'd been early adopters. Uh, they've done well and they're looking for opportunities to utilize it. Um, yeah. It on a luxury vehicle. If it's a specific car specific color we already sell throughout the United States with our two Mercedes-Benz. Overseas, not as much, but in this case, I couldn't tell you exactly what he saw in that vehicle, but I know that he wanted it.
[00:14:02] We were willing to sell it and deliver.
[00:14:06] Michael: It's funny, I'm reading through the comments and you're right. As you explain it, I go, this seems pretty cut and dry, but also opens up a whole new avenue where it kind of answers the question that a lot of us have had. Is crypto a fad. Is it going to go anywhere? Is it not going to go anywhere?
[00:14:29] Well, now all of a sudden you're, you're explaining a very practical use for crypto, not, Hey, I'm not just buying doge coin because Ilan said or whatever. No, there is a legitimate group of investors out there who have crypto in their bank account, and I've just given them a faster, more convenient way to transact.
[00:14:49] Um, But it almost sounds too good to be true. So in that call it six month due diligence process. What were some of the infrastructure things aside from the, the, the, the, the, um, exchange company. Was there anything else that internally you guys needed to think about and implement a process around?
[00:15:10] Kevin Frye: Our biggest struggle in the beginning was we were looking actually taking possession of the crypto currency.
[00:15:16] Once we got past not doing that, it became much so. But I will allude to some of the tax questions. And please let me preface this. I'm not a, I'm not an accountant. I'm not a tax attorney and we're going to cover some sensitive areas. Um, but some of the questions I've got about well, how, how do you handle the taxation on the consumer for the cryptocurrency?
[00:15:39] From the standpoint, I'll throw out some random numbers. Let's say I bought a Bitcoin for a thousand dollars per coin. Now it's. 40 grand a coin. How do we tax that? Well, my answer is we have nothing to do with that. If you utilize money from your savings account and you had an interest rate and you made some money on that, you're going to pay that to the IRS independent of us as the dealer.
[00:16:01] All we know is that you purchased cash transaction from us, uh, this vehicle using some cryptocurrency and the sales tax and respect of tax. Based upon wherever you're selling will apply to the full transaction as normal, um, in terms of reporting a, uh, over 10,000 in cash, this is electronic. So it's not actually physical cash transaction, which is obviously those rules are based around people trying to launder physical currency so that doesn't apply.
[00:16:37] Um,
[00:16:41] Michael: Crypto, because it's all on the
[00:16:43] Kevin Frye: blockchain, it's electronic and, and, you know, we could go a whole side conversation on block Cain with the security of that is unbelievable. It really is. That's part of the beauty of cryptocurrency, but the, on the taxation of gains made with cryptocurrency, this is a hot, hot topic because of course every government in the world wants to get their hand in the case.
[00:17:10] How do I tax this person on this currency that they don't even control? And you could do a whole complete different show on that. All I will suggest is that this year will falling, filing my taxes electronically was the first time I saw the question, Hey, did you want to report any gains? Come on cryptocurrency.
[00:17:31] And it seems like the IRS has gone by. You know, you, do you feel guilty? You're really honest to report that. I couldn't tell you.
[00:17:40] Michael: Hey, D do you want to report the answer to that is simple. No, I don't
[00:17:45] Kevin Frye: want to report similar to if you bought anything online and you didn't pay sales tax, which is a voluntary submission on your IRS, I believe.
[00:17:56] And I'm sure there's some much better experts on this podcast, listening to. That, that is a really great area that governments want to control, but I don't necessarily think they have control.
[00:18:09] Michael: Yeah. And how can you, I mean, I guess this is why governments right now are scrambling to create government sanctioned cryptos.
[00:18:17] Absolutely. Right. Like, I'm gonna, like, I'm going to buy that. Like, I'm going to invest in that. Oh, oh, government sanctioned. Okay. You got me. I'm just going to sell all my theory, all my Bitcoin, my XRP. Um, but, but you do, you know, you're right. It can be perceived as a gray area, but I look at the specifics of that question.
[00:18:41] Do you, cause I've seen that question too. Do you want to report. Well, you're asking if I want to do something. The answer is no, I've answered. Honestly, if you're asking me if I have any to report, that's a different question. Um, you know, that's a different question. Okay. Yeah. I do have some, I do have some, but if you're asking if I want to report it, no, I don't.
[00:19:05] Well, I've
[00:19:05] Kevin Frye: got some news for you. If you are speculating, you're investing in a cryptocurrency. And request a 10 99, it doesn't exist. They don't generate that paperwork intros as part more of that gray area. But yet the telling statement, if you get online, there's a great video on with CBS news, like a seven minute video, kind of like a crypto currency for dummies in the common theme amongst all of the experts is that don't invest any more than you're willing to lose.
[00:19:38] So it is still a highly speculative instrument, but in the same respect, a lot of our younger people, the millennials like it, because they're young, they've got time, they're willing to do some high risk and expectations of some high returns in the future.
[00:19:56] Michael: Yeah, it makes perfect sense. Does Jeff Wyler automotive have any plans to get into the NFT game?
[00:20:04] Kevin Frye: Uh, I am not aware at this time. Uh, if.
[00:20:08] Michael: I, that was one of those things that I'm like, so let me get this straight. I'm buying an original piece of digital art so that I can say, well, like what do I do with it? That was where my original thoughts went. And now I'm realizing, oh, This is actually just a creative way that people are crowdsourcing or crowdfunding.
[00:20:28] Um, you know, buying shares into some sort of digital ecosystem where money will be generated. So I think that's really interesting. Um, can you give us a sneak peek on what you're talking about at digital dealer? I know you've mentioned it's going to include a little bit of this, but can you give me a wet, our whistle
[00:20:47] Kevin Frye: just a little bit.
[00:20:48] Yeah, I'm going to have some fun at this digital dealer. And, uh, and I I'm stealing this from my kids are getting a little bit older now, but it's basically sipping some tea and I'm going to talk about some of the hot topics of the day. I guarantee I'm going to press some buttons, but listen, even as I bring these topics up now, there's probably going to be some people starts sweating and get upset, but some of the questions I'm going to address is do we still really need SEO or are there better solutions?
[00:21:17] Uh, D do we need SCM or are there different alternatives that can accomplish more than SEM? Should we be using forms on websites or going a hundred percent chat? I'm gonna talk a little bit about cryptocurrency, and I'm also going to be talking about the future of our current market, which I'm going to tell you right now.
[00:21:36] I'm not bullish. Uh, we have the fed meeting again tomorrow, probably going to raise rates by half a point. So just a lot of hot topics that I know are going to fire some people up, but Michael, at the end of the day, I'm a fellow dealer I'm on the front lines. I deal with this 24 7. And I believe with that in mind, my input usually has a lot of credibility with the fellow dealers in the room who are struggling, just like myself would get called.
[00:22:07] Michael: Well, I mean, like I said, I've always, always enjoyed listening to you speak and you're right. You, you, um, have a very keen way of calling it, how it is based on how it is. And it does come with the credibility of, of, you know, by virtue of the seat that you're sitting in. Um, not an, a six intruder, but I, I, I gotta draw attention to it.
[00:22:26] You said a six intruder earlier, and I love that airplane. Um, is that what you.
[00:22:33] Kevin Frye: Yeah, that, uh, you know what? I was an aerospace engineer and college, and from the aerospace side, there are some air frames you can only design so far. You've really done well. And the 86 was one of those, a fantastic. The reality is with the modern military, they have dual purpose aircraft fighter attack to labile or inexpensive and what not.
[00:22:56] Uh, but, uh, you know, it's funny. I think everything I flew in, in a museum now
[00:23:02] Michael: they're placing it on the, on the stand outside the museum one that's always on display. I, I, we were talking pre-show about my love of airplanes and how I it's, it's on my bucket list. I need to be get my pilot's license. But I mean, from your experience in the service, um, I know a couple of other, you know, friends and colleagues who have flown airplanes is can you map everything you do today back to flying an airplane?
[00:23:32] Like they can.
[00:23:34] Kevin Frye: Uh, well, I'm not sure exactly what you mean
[00:23:36] Michael: there. Well, what I mean is operationally, you know, like there's always an airplane flying an airplane analogy. Are you able to, are you able to find analogies to bit from business to flying airplanes?
[00:23:50] Kevin Frye: Probably give it more to just the leadership skills taught to you as an animal officer.
[00:23:55] And you know, it's always about adapt and overcome, adapt and overcome. Um, it leads to a lot of the innovation stuff I do. Don't take no for an answer. How do you accomplish what you're trying to do? You know, I would say in the aviation side, the thing that blows me away is so when I was a young guy and I was flying in, in desert storm, the multitasking is absolutely insane.
[00:24:20] I'd be listening to seven different radio frequencies or trying to fly a plane. Uh, to keep it out of the water, trying to navigate, to know where the heck out match, trying to develop a weapon solutions while try not to get shot down in you're doing 500 things. And it, it was difficult to build up that level today.
[00:24:40] And I mean this and dead serious kids playing these video games and they've got the headsets on and they got their smart phone to the side. It's like, they're a natural. For the small Ty tasking. And it's exciting to see this new wave of talent command of the military find aircraft. I think they're much better prepared than we were back then.
[00:25:00] Michael: Wow. That's tremendous. And my crazy brain can't help, but say, I'm listening to everything you just said. And my victory is like, I got to inbox zero. It's like a big perspective thing, man. I have so enjoyed this conversation. Thank you so, so much for joining me on the dealer playbook. How can those listening get in touch with you?
[00:25:26] Kevin Frye: Well, they're more than welcome to connect with me on Facebook or LinkedIn. They can email me directly at Kevin, not fried F R Y E. Jeff wyler.com. I of course always come up and say hello at digital dealer DMS. See any of the shows.
[00:25:53] Michael: I'm Michael Cirillo and you've been listening to the dealer playbook podcast. If you haven't. Please click the subscribe button wherever you're listening. Right now, leave a rating or review and share it with a colleague. Thanks for listening.
